2018 (10) TMI 1279 - AT - Service Tax

100% EOU - Refund Claim - rejection on the ground that appellant failed to submit required documents to establish that the services were to be treated as export of service - Held that - The agreement for sale need not be necessarily a written one in a pre-defined format. It can be through oral agreement or written request made in letter correspondence. It can also be offer and acceptance communicated through emails. Therefore, rejection of refund claim on the ground that agreement copy has not been submitted is improper. Going by the order-in-original dated 25.08.2015 and 13.01.2015, in which refund claim amount has been referred in tabular form, the disputed amount of refund claim was ₹ 2,86,171/- and ₹ 4,69,426/- respectively. Going by the ST-3 copy submitted, the total amount outstanding to the credit of the appellant was ₹ 10,19,895/- which indicates that after deducting the claim amount adjudicated upon in those two order-in-originals, the balance amount remaining is ₹ 2,64,298/-, which is also found reflected in the order-in-original dated 16.06.2015 in tabular form. Rejection of refund by the Commissioner (Appeals) solely on the ground that there was no clarity as to for which period such credit had been debited is not acceptable for the reason that by application of mind, such amount could have been ascertained even by a man of ordinary prudence having no technical expertise that of Commissioner (Appeals) has. The appellant is eligible for the entire refund claim of ₹ 2,64,294/- which shall be paid by the respondent department within three months along with applicable interest - Appeal allowed.

Summary

Issues:
Denial of cenvat credit amounting to ?2,64,298/- for two quarters by the EOU service provider.

Analysis:
The appellant, a 100% EOU service provider, had cenvat credit amounting to ?2,64,298/- denied for two quarters ending in December 2013 and March 2014. The denial was based on different grounds in the Order-in-Original and the Order-in-Appeal. The appellant failed to submit necessary documents to establish that the services were export of service according to the Order-in-Original, while the Order-in-Appeal stated that the exact amount of credit to be availed could not be ascertained from the ST-3 returns submitted by the appellant. The appellant argued that similar services in subsequent periods were deemed admissible for credit, and due to being a new company, some documents could not be produced during the refund claim process. The appellant contended that all required documents were eventually submitted, including a Chartered Accountant report on cenvat credit bifurcation, and prayed for setting aside the Commissioner (Appeals) order and allowing the credit for the disputed period.

The Department's representative argued that no infirmity or illegality was found in the Commissioner (Appeals) order. Referring to a CBEC notification, it was stated that the appellant failed to debit the claimed refund amount from the cenvat credit account at the time of making the claim, which could lead to the rejection of their appeal.

The Commissioner (Appeals) found that the appellant had entered into an agreement with a foreign client for design services, which qualified as an export of service under Rule 6A of the Service Tax Rules, 1994. The Commissioner noted that the rejection of the claim solely based on the lack of clarity regarding the debiting of the credit for the specific period was not in line with the statute's spirit, emphasizing that substantial justice should prevail over technical considerations. The Commissioner also highlighted that the agreement for sale need not be in a specific format and can be established through various means like oral agreements or email communications. The Commissioner further pointed out that he had the authority to conduct further inquiries and form independent opinions beyond the order-in-original. The Commissioner concluded that the appellant was eligible for the full refund claim of ?2,64,294/-, which should be paid by the respondent department within three months along with applicable interest.

In conclusion, the appeal was allowed, and the Commissioner (Appeals) order was set aside, granting the appellant the entire refund claim amount along with applicable interest.